Rare Earth Smuggling Case Raises Concerns

The recent crackdown on a major rare earth smuggling case has again raised concerns about China’s illegal rare earth mining and trading.

In November, customs of Baotou City in north China’s Inner Mongolia Autonomous Region, the world’s largest rare earth production base, ferreted out 130 tons of rare earth products valued at 14 million yuan (US$2.3 million), which had been smuggled in batches from a local private company to the KAD company in Vietnam beginning in December 2012.

Several rare earth smuggling cases involving more than 100 million yuan have been busted by Qingdao and Shenzhen customs in recent years.

“Illegal production and trading is the biggest threat to the country’s rare earth industry,” said Zhang Zhong, general manager of Baotou Steel Rare Earth Hi-Tech Co Ltd.

According to Baotou Rare Earth Research Institute, the domestic and global markets have been glutted with illegal rare earth products, which has adversely affected the prices of rare earth products and disturbed the industry order.

“In 2012, the production quota for the southern ionic rare earth mines was 134 million tons. However, later statistics showed that the real output was 347 million tons,” said Ma Rongzhang, secretary-general of the Association of China Rare Earth Industry.

Of the 400 kinds of rare earth products that China provides, only about 50 to 60 of them are included in the tax catalogue.

Experts said illegal mining and production allow mining companies to evade taxes.